BusinessCompany News‘Green’ reporting puts profits under threat

'Green' reporting puts profits under threat

Reporting the full environmental impact of all their activities could wipe out the profits of the UK's largest companies.

Link: Green reports in the pipeline

Simon Thomas, chairman of new environmental rating agency Trucost, said this week that no UK companies would be profitable if the cost of their impact on the environment was reflected in their bottom line.

Trucost has invested £2.5m in a rating system that measures existing data. It looks at the way a company sources materials and how it processes them. The tool, which the company hopes will become the international standard for measuring environmental performance, also looks at the environmental impact of suppliers.

The higher the rating the better the company’s performance. Trucost has ‘rated’ 64 of the UK?s biggest companies. So far they have scored as low as 10%, with very few beating 50%.

‘The 50% figure means companies would have to sell their product for twice as much to adjust for externalities,’ said Thomas. ‘None are really profitable at all if you take into account all externalities.’

Currently just 80 of the FTSE-350 publish environmental reports. The recent company law white paper is likely to lead to companies being forced to do so. The growth in retail ethical investment funds in the UK, from £199m in 1989 to £3.7bn by the end of 2000, is also driving change.

Consignia was given a Trucost rating of 51%. Charles Tucker, the company?s head of the environment, said it had failed to ‘grasp the enormity’ of the issue until recently despite running one of the UK’s largest fleets. Tucker said the process had allowed the company to ‘create a clear audit trail’ in measuring its environmental impact.

‘Anything to do with the environment is to do with transparency,’ he said.

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